Apex chambers welcome industry-specific initiatives

The Union Budget 2006 sends a positive signal to foreign investors with a stable tax regime, say the chambers of commerce in Karnataka. They also welcomed the Budget for it maintained the 'status-quo', but added that the Budget could have done more to further augment and sustain the country's long-term growth prospects.

They said that the trade and industry had requested for total withdrawal of the fringe benefit tax for which there has been only a marginal relief.

The industry, however, feels disappointed as the option of a flat tax rate has been sacrificed with the continuation of the fringe benefit tax and the increase of MAT from 7.5 per cent to 10 per cent, including long-term capital gains tax in MAT.

"This will have a negative impact and is retrograde," said Anant R Koppar, president, Bangalore Chamber of Industry and Commerce (BCIC).

"The increase in service tax from 10 per cent to 12 per cent will have a major impact, especially on the IT and export-oriented industries as they will not be able to claim a set-off in the absence of taxable output services. Other disappointment is the absence of a road map to reduce the CST from 4 per cent to 2 per cent," he added.

BCIC has also welcomed the industry-specific proposals which will benefit the textile, auto, food and aerated drinks, steel and semiconductor manufacturers.

On the infrastructure front, Koppar welcomed the announcement of seven ultra mega power projects, especially the project Set to come up in coastal Karnataka.

The Bangalore - Chennai highway, proposed by the Centre will also accelerate industrialisation in that belt, he noted.

Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has welcomed the special funds earmarked for giving a boost to foreign tourism in the country by identifying 15 destinations/circuits and 50 villages for their cultural value.

This association felt that the MAT going up from 7.5 per cent to 10 per cent is not a good sign as it seeks to tax even the unreal income. It also seeks to tax long-term capital gains, which are otherwise exempt, FKCCI noted.

S Babu, president of FKCCI said that having a road map for GST is a good measure though on the flip side it will mean an increase in the service tax from 10 per cent to 12 per cent.

Karnataka Small Scale Industries Association (Kassia) said that the importance to technology upgradation along with the cluster development initiatives will strengthen the SSI movement. The modernisation of ITIs along with the clearance to the SME Bill will endow the SSI sector with a more congenial environment for efficient functioning," Hareesh P Hegde, president of Kassia said.